Um, Amazon = Walmart ..... Whole towns have been destroyed by one retailer -- goals of Amazon are the same and the results will be the same. Bye bye brick and mortar booksellers. I truly believe Apple here.
Man this guy Eric Holder. Is this what I expect the nations top Law enforcement officer to be "worried" about.? This is another Obama admin blunder.
This is true. Amazon can sell a book at a loss if it wants. What is illegal is when Amazon tells a publisher they will not carry a traditional book unless the publisher agrees to significantly lower the whole sale cost of an e-Book. It's Amazon's market position that makes it illegal.
I also question whether Amazon actually sells books at a loss. There was a recent story about Amazon publicly telling app developers it would pay them 20 percent of the normal sales price of their apps when giving those Apps away on its free app of the day promotion. Once a developer was asked to be the App of the day, they were given hidden communications that they had to agree to dispense with being paid the 20 percent to be made the app of the day. I suspect Amazon puts the same pressure on publishers, which is why publishers don't like Amazon.
Quote:
Originally Posted by gradam01
Amazon selling below cost is not illegal. It's call a loss leader. If loss leaders were illegal every retail and grocery store in the country would be shut down.
While it is technically true that selling at a loss is not illegal, when you combine selling at a loss with having a very dominant share of the market (as Amazon did), it is likely to fall under predatory pricing rules:
I wouldn't really label your arguments fallacies, more mistaken notions...
Quote:
Originally Posted by caliminius
Fallacy #1: Amazon hasn't show much tendency to really care what books it was selling. You might recall the controversy involving them allowing that independently published eBook about pedophilia. Contrast that with say Apple's refusal to sell an app featuring the works of a Pulitzer Prize winning cartoonist (which they later reversed after it got widespread media coverage). I bought "The Yoni" from Amazon (print version), which is about the historical use of female genitalia as a sacred symbol. It contains numerous photographs of symbolic representations and outright images of female anatomy. Do you think Apple would allow that book in iTunes?
And regardless, how does that differ from the system we have today? You don't think the publishers are selective in the titles they are willing to publish?
First, you seem to be comparing two different things, never a good thing for a sound argument. The App Store is not the iBookstore, so your comparisons are invalid. Furthermore, Amazon is well known for imposing rapacious terms on everyone, and there's no reason to think customers will be any different once they have no where else to go. When Amazon has you by the balls, it's their practice to squeeze hard.
Quote:
Fallacy #2: Raising prices isn't Amazon's modus operandi. It never has been. Amazon works on a high volume, low profit system versus Apple's low volume, high profit model.
The Kindle wasn't expensive initially because it had a monopoly on the e-reader market. It was expensive because it was new, the components were expensive, and the fact that Amazon had no way to know whether it would succeed. (Weird, kind of sounds like the initial launch of the iPhone, another product that was "overpriced" originally.)
The people attacking Amazon seem to be stuck on the idea that Amazon wants to kill off all competition. Maybe, but don't other businesses want the same? Would there be many sad faces at Apple if Google announced it was killing Android?
This is a rewrite of history. The Kindle is a cheap piece of plastic crap. Prices were ridiculously high until the iPad was released, at which point they suddenly dropped dramatically. The rest of your argument seems to be that since other companies would like to control entire industries, it's ok that Amazon does, which is farcical, to say the least.
Quote:
There are other reasons to sell some items below cost. A big one is that it builds good will with customers. If they can get a good price on something, they're more likely to come back and buy from you again. They'll even pay a little extra on some things just knowing how much of a good deal they got on the last item.
When it comes to eBooks, Amazon also had another good reason: building a market. There really wasn't much of a market for eBooks before Amazon created one. (Kind of like the iTunes Store and downloaded music.)
And let's face it, $9.99 was one of those sweet spot prices. It's basically $10, but it lacks that extra decimal so it psychologically feels a lot cheaper. Kind of like $0.99 was a sweet spot for digital tracks.
Music and books are not the same industries, so comparisons aren't valid. I know, you want everything as cheap as possible, but the only way you get that is for someone to get the short end of the stick, which, in this case, will be publishers and authors, and eventually customers.
Rather than letting the market sort itself out, Apple worked with publishers to make book pricing more expensive by denying Amazon the ability to sell books at the prices it wanted to.
Sounds antitrust practice to me. Anyone was free to see books cheaper than Amazon and gain market share. It's not like the publishers were loosing money! They got their price whatever Amazon sold a book for.
Personally I dislike spin.
The people who lost out from this whole shenanigans was us, the consumer. That is why this is being investigated.
In the short term, yes, consumers would pay more. But in the long term, it would have made Amazon a monopoly and then prices would have steadily climbed anyway. Or, Amazon, being a monopoly would have put pressure on the publishers to lower the wholesale price just as WalMart has forced manufacturers to lower their wholesale prices. Do you know what that led to? Declining quality and the move of manufacturing to China, India, etc.
Low online prices do give us short-term benefits, but in the long term, it also destroys physical retail. Do you really want to walk down Main Street and see nothing but drug stores, dirty delis, liquor stores, check cashing places, fast food restaurants and gas stations? Because that's where the massive move to online purchasing is taking us.
Furthermore, Amazon still has to make a profit. So they lower prices on some items to gain market share, but raise prices on others. WalMart is also a good example of this. They'll sell a DVD player for $25 to get you in the store, but check out lots of other products and they sell at list price. So in the long run, even with Amazon, if you buy a variety of products, you'll pay more.
Apple asked for and got a "most favored nation" clause. All it said was that when the Publisher establishes the price, it can't be one list price in the Apple store and a different list price when they sell to Amazon or any other store. It didn't say that (as far as I know) that Amazon still couldn't sell for a lower price. (If it did, that will definitely be thrown out).
Have you ever done business with a State or the U.S. Government? Guess what they put in almost every contract? A "most favored nation" clause. You can't sell to anyone else for less than you sell to them for the same product/service.
And there's one other issue: when you consistently sell below wholesale price, that can be considered to be "predatory pricing" and it's illegal. And that's what Amazon does in order to gain market share. Apple's not perfect and they probably did do a few things wrong in this case, but the Government went after the wrong party, as far as I'm concerned.
There's no question that Amazon was leveraging its dominant/monopoly position of online sales of physical books to dictate terms to the publishers for online sales of ebooks. That's the real antitrust issue here.
1. You said it perfectly. Publishers colluded. It's not the same as Apple colluded..
Apple was added to this case for boombast! If apple wasn't involved you'd see people saying all over that amazon is the bad player here forcing content providers to support their ebook monopoly or else... It just sounds like this is government overreach.
Thank you for making my point for me. Why should apple be on the hook for what other people do? Secondly, publishers are free to set their own prices. Publishers set the pricing model for retailers not pricing for the end consumer. There is a big difference. I have a feeling this is going to the supreme court and apple and publishers will prevail.
I buy my books directly from the publisher and prices are much cheaper. They give me 40% off and free unreleased books etc.... In amazon's world publishers can't make any money from their ebooks. They should just stop doing business with 3rd party ebook sellers and sell their own books themselves. It makes no sense at all to have a retailer under cutting your efforts to sell your books just so you can lose money on them.
Publishers should just make people go to their website to buy books. If the book is popular people will buy them. Ebooks don't cost zero. Marketing and infrastructure is involved in making eBooks. EBooks are made out of HTML, CSS, JavaScript. You need developers for this stuff. It's not just oh eBooks are cheaper because there is not as much manufacturing costs. The costs are different. Not to mention the third party retailers cut.
The problem is people have been taught that intellectual property has no value because it isn't physical. That's simply not true. You aren't just cutting off manufacturing costs. You are exchanging one cost for another cheaper cost. Publishers and authors deserve to be able to make money off of their investment. Retailers should be able to set the prices of their books. They can't do that when amazon can sell at a loss which undercuts them and their efforts to sell their own books on their own website.
Again if I were the publisher, I'd terminate the contracts with amazon and sell on my website. The publishers need to take control of their content.
Your post makes a few major flaws... Let me quote from the DOJ case against the publishers, and apple. The following is the smoking gun against apple. If this can be proven by the DOJ, then it is clear that apple is guilty of collusion:
Quote:
As it negotiated with the Publisher Defendants in December 2009 and January
2010,Apple kepteach PublisherDefendant informed of the status ofits negotiations with the
other Publisher Defendants. Apple also assured the Publisher Defendants that its proposals were
the same to each and that no deal Apple agreed to with one publisher would be materially
differentfrom any deal it agreed to with another publisher. Apple thus knowingly served as a
critical conspiracyparticipant by allowing the Publisher Defendants to signal to one another both
(a) whichagency terms would comprise an acceptable means of achieving their ultimategoalof
raisingand stabilizing retail e-book prices,and (b) that they could lock themselves into this
particular means of collectively achieving that goal by all signing their AppleAgency
Agreement.
This states that apple was informing each of the publishers what the other was doing, so that none of the publishers had to "act first". The publishers knew they couldn't raise prices on their own because it would destroy their sales,while competitors books would still sell well. They all had to move in unison, and apple allegedly helped coordinate them.
With a couple of the publishers settling already, all it takes is for them to surface a few emails showing that apple helped facilitate the cross-industry change in pricing. Even if this isn't proven, it's clear that apple knew the publishers were colluding, and setup a system to enable all of the publishers to change their pricing simultaneously. Otherwise, no logical publisher would EVER sign a contract like they did with apple.. It's not worth giving so much control to a minority player in the market.
At the end of the day, it really doesn't matter is all the publisher settle, or if apple does, because a couple of the publishers have settled. As long as they're forced to return to their previous publishing model (turning back the clock on their illegal behavior), the other publishers will be forced to follow suit, or canibalize their sales.
I know this is an apple forum, but it's amazing how many people here think apple can do no harm. This makes sense if you have a large portion of apple stock, but for common people.. why? You're defending a company that actively made things more expensive for you. I personally love my ipad, but refuse to buy from apple's ebook store. There are a lot of apple's stores I won't use because I don't agree with their policies, as they seem to be all about extracting the last cent out of my bank account, and transfer as much of the money as possible to apple. I'll still buy apple's hardware because it's the best out there, but I'm looking forward to cheaper ebooks becoming available on amazon (another company who I give lots of business to, and support... just like google).
Apple asked for and got a "most favored nation" clause. All it said was that when the Publisher establishes the price, it can't be one list price in the Apple store and a different list price when they sell to Amazon or any other store. It didn't say that (as far as I know) that Amazon still couldn't sell for a lower price. (If it did, that will definitely be thrown out).
so you're basically claiming that apple's contract will be marked Null by your own admission.
Apple's contract said that if any other store attempts to sell an ebook for less than apple does, apple can charge the same price the other store is charging, and then only give the publishers their 70% cut of the new price. This effectively says that the publishers have to set the selling price that other book sellers can charge.
As for your arguments about how lowering prices will kill the industry... It might just... spur innovation in the industry. Considering the VAST majority of the book sale's revenues go to the publisher and not the authors (and the publisher does little more than provide an editor for many books... if that), there is a LOT of room amongst the publishing houses to cut out the fat.
Authors are working for peanuts already, why do you think they'll stop working when their publishers earn less money. Sure, some of the publishers will go out of business if they don't change their ways... Is this a horrible thing? Capitalism relies on businesses failing to get the most efficient usage of resources. Lots of typewriter manufacturers either changed their products, or went out of business when the PC industry took off, why should this be any different? I have no sympathy for these failing companies, it's still the most efficient way to allocate resources. I do feel bad for many of their workers, but most of them manage to get back on their feet before too long, and everyone benefits from a more efficient allocation of workers.
Your post makes a few major flaws... Let me quote from the DOJ case against the publishers, and apple. The following is the smoking gun against apple. If this can be proven by the DOJ, then it is clear that apple is guilty of collusion...
Prosecutors make a lot of grandiose claims in their filings, and it always sounds like they have a smoking gun, but it often turns out to be nothing more than hot air.
Rather than letting the market sort itself out, Apple worked with publishers to make book pricing more expensive by denying Amazon the ability to sell books at the prices it wanted to.
Sounds antitrust practice to me. Anyone was free to see books cheaper than Amazon and gain market share. It's not like the publishers were loosing money! They got their price whatever Amazon sold a book for.
Personally I dislike spin.
The people who lost out from this whole shenanigans was us, the consumer. That is why this is being investigated.
--------
The DoJ is colluding with Amazon to resurrect its monopolistic enterprise. The AG is putting the cart before the horse. He is siding with a monopolist which has more than 90% of the market, achieved through price gouging and product dumping. Just because Amazon is charging below cost price does not mean it is good for the consumers in the long run. Books are a cultural thing and once you destroy this intellectual aspect of the industry, the long-term result would be disastrous, leading to mediocre standards. Nobody is going to do serious research to write a good book if he is going to be paid a pittance. Just as the US has lost many industries to others through short-sightedness of politicians and bureaucrats, the book industry will also migrate to such places as India and China. Workers will be thrown out of job and thousands of stores will be shuttered for good. Think tanks will say that the workers can go and do other jobs because the US is resilient. But the politicians have screwed up so many areas of human endeavors in the US that the rate of resiliency itself has become a victim of neglect. So why has the US, which was the premier country in so many areas of disciplines two decades ago, declined so precipitously? This has to do with the poor quality of narcissistic politicians and bureaucrats running the country now.
Are we going to see the same scenario of the devastating result of the collusion of politicians with the banking industry being repeated again? At that time the politicians and their think-tanks claim that cheap loans and credit will help consumers realize the American dream. In the short-term it seemed that this tactic was working, and consumers were led down the garden path, but soon the banks were gouging customers with high interest rate for their cheap loans. In the long run the whole economy tanked, thanks to the unconscionable conduct of the greedy bankers and stupidity of ivory-tower intellectuals.
Amazon is becoming such a creature in the making. Nobody with a thinking brain would believe that Amazon could sustain itself on perpetual losses. A time would come when it will have to recover for all such losses. And Amazon being a monopolist, you know the answer to the final outcome.
Books are a cultural thing and once you destroy this intellectual aspect of the industry, the long-term result would be disastrous, leading to mediocre standards. Nobody is going to do serious research to write a good book if he is going to be paid a pittance.
You need not continue on after saying this, because if this were true, there'd hardly be any new books written today. Aside from a handful of best-seller authors, most barely receive a pittance. The publisher rake in money, and the authors might get a few thousand dollars. For many authors, writing is NOT their day job, as it cannot pay the bills.
What's the biggest racket of them all though is the textbook market. Professors and graduate students basically write these books for free... Well, not really for free, but the university (or government grants etc) pays them, and they spend some of their time working on these books. Then the publisher releases the book, and, if the authors lucky they MAY get royalties from it (I have a friend who wrote an entire chapter for a text book,and his "reward" was that he could buy a copy of the book for a discounted price... He didn't even get a copy of the book he helped to write!). One of my professors wrote a book that is used in enough courses across the country, and his income from the book might be a few thousand a year... I'm pretty sure it's less that that. Considering he spent months of his life writing this, he obviously didn't write it for the money. Of course, these publishers that you're protecting are charging hundreds of dollars for these books, and seeing to it that the authors change the questions in them every couple years so that they can sell a new edition and kill the used textbook markets.
So yeah, if the publishers profits are harmed by the free market, so be it, they've been milking the consumers for years, and it's about time a disruptive technology came along that challenged them. Stop pretending this is remotely about the author, I bet they were paid the same pittance regardless of whether the ebook was sold using the agency model or the wholesale model. The only thing apple has done for this industry is helped to maintain the publishers profits,while guaranteeing that they make the maximum possible profit off every book sold. It's reaching the point where apple is being as greedy as the publishers, making sure they get their share of the loot from the authors work (and 30% is a fairly nice piece of the pie for transferring a couple MB across the internet and processing a credit card order).
A simple before and after comparison of the before and after average prices should suffice as evidence that what you say is true.
Feel free to present it.
Will those sixteen states take into account the lower prices that resulted from Amazon avoiding paying them sales tax?
That's not entirely enough. If those lower Amazon e-book prices were shown to be below actual cost prices the fact the prices went up would not be due to collusion, but simply attributable to Amazon no longer willing to take the loss. Just because prices rose doesn't mean there was any illegal activity by anyone at all.
That argument seems to be a huge hole in the DoJs case if it ever makes it as far as a trial, since the Amazon actual cost has been reported to be in the $12.00 range. That would make $12.99 to $14.99 prices reasonable fair market value both on Amazon and iBookstore. That would mean bye-bye to beyond a reasonable doubt when the pricing changes are looked at. Remove that as a case motivator and there's nothing else left worth pursuing as the smoking gun got identified as a water pistol, not a smoking gun after all.
his states that apple was informing each of the publishers what the other was doing, so that none of the publishers had to "act first". The publishers knew they couldn't raise prices on their own because it would destroy their sales,while competitors books would still sell well. They all had to move in unison, and apple allegedly helped coordinate them.
With a couple of the publishers settling already, all it takes is for them to surface a few emails showing that apple helped facilitate the cross-industry change in pricing. Even if this isn't proven, it's clear that apple knew the publishers were colluding, and setup a system to enable all of the publishers to change their pricing simultaneously. Otherwise, no logical publisher would EVER sign a contract like they did with apple.. It's not worth giving so much control to a minority player in the market.
That's an interesting take with flaws of its own. How come the iTunes store music and video agency model has been tacitly allowed as legal when all the negotiations and assurances of equal treatment were made there too? That model has been very transparent for 10 years now, why should extending it to another market suddenly make an openly consistent agency model a collusory practice?
See, it's not as simple as you would like it to be. There are an tremendous number of unintended consequences awaiting the conclusion of this case because the exact thing that is being called the collusion in your analysis of the states writeup is the consistent application of the agency pricing model.
If the collusion stands does that make Apple's other agency model negotiations illegal by extension? That would not be far fetched.
If Apple's other iTMS negotiations are then called collusion by logical extension, who in government do we blame for being asleep at the switch and allowing this illegal collusory profiteering to last for over 10 years?
The iOS app store is probably safe as it is part of a singular vertical market where there is no notion of internal price competition to consider.
That's an interesting take with flaws of its own. ...
The other flaw in his argument is that books are not interchangeable commodities. Except for public domain "classics", each book is unique, so it's not like you can just buy another publishers version of most books. So the argument that other publishers might undercut your price is significantly muted.
That's a pretty big accusation your presenting as fact without a single shred of evidence to back it up.
Maybe the DoJ should also investigate the same agency model Apple used for their App Store because those App Store apps are so expensive¡
Precisely. Apple only have to point to the benefits to both app developers and consumers of the agency model as implemented in the App Store to make the case against eBook sales look as ridiculous as it is. There is no need for wholesalers and retailers in an electronic marketplace, just someone to set up an electronic store in which transactions between developers/authors and their customers are facilitated. And it was Apple, and Steve Jobs, who was smart enough to do just that. And now Apple have developed iBooks Author which allows authors to get their eBooks out to their customers without the need for traditional book publishers. This is now a fantastic opportunity for both eBook authors and readers - the ones that really matter.
The DoJ should stop wasting its money on a case they must not win.
Nonsense. Even if we assume, for the sake of argument, that all parties charged are "guilty" of the accusations, it's the job of the DoJ to do what's best for the country. Setting up Amazon as the controller of the publishing industry is contrary to the public interest, and ultimately harmful to this country's citizens.
its nonsense that the case at hand is publishers + apple?
That is the case. Not amazon.
If the DoJ is working on hypothetical "what ifs: then they can join apple and amazon together with the "what if we colluded together argument.
its nonsense that the case at hand is publishers + apple?
That is the case. Not amazon.
If the DoJ is working on hypothetical "what ifs: then they can join apple and amazon together with the "what if we colluded together argument.
the case at hand is the disccusion
It's nonsense to assert that the DoJ ought not to consider the public interest in enforcing antitrust law since the whole point of antitrust law is to protect the public interest. Justice may be blind, but it's not supposed to be stupid.
It's nonsense to assert that the DoJ ought not to consider the public interest in enforcing antitrust law since the whole point of antitrust law is to protect the public interest. Justice may be blind, but it's not supposed to be stupid.
Oh dear. This case is just that, this case. The wider issues should be considered. However, the legal actions of those within this case is what is currently pursued. The hypothetical endpoint of the wider industry is not.
Unless you believe that DoJ should ignore what they see as illegal actions, but to rather focus on forecast potential actions of a corporate.
Comments
DITTO's
Um, Amazon = Walmart ..... Whole towns have been destroyed by one retailer -- goals of Amazon are the same and the results will be the same. Bye bye brick and mortar booksellers. I truly believe Apple here.
Man this guy Eric Holder. Is this what I expect the nations top Law enforcement officer to be "worried" about.? This is another Obama admin blunder.
This is true. Amazon can sell a book at a loss if it wants. What is illegal is when Amazon tells a publisher they will not carry a traditional book unless the publisher agrees to significantly lower the whole sale cost of an e-Book. It's Amazon's market position that makes it illegal.
I also question whether Amazon actually sells books at a loss. There was a recent story about Amazon publicly telling app developers it would pay them 20 percent of the normal sales price of their apps when giving those Apps away on its free app of the day promotion. Once a developer was asked to be the App of the day, they were given hidden communications that they had to agree to dispense with being paid the 20 percent to be made the app of the day. I suspect Amazon puts the same pressure on publishers, which is why publishers don't like Amazon.
Amazon selling below cost is not illegal. It's call a loss leader. If loss leaders were illegal every retail and grocery store in the country would be shut down.
While it is technically true that selling at a loss is not illegal, when you combine selling at a loss with having a very dominant share of the market (as Amazon did), it is likely to fall under predatory pricing rules:
http://en.wikipedia.org/wiki/Predatory_pricing
And, TBell, I believe the publishers stated that Amazon was selling some items at prices below what they paid for it, so it's not speculation.
Fallacy #1: Amazon hasn't show much tendency to really care what books it was selling. You might recall the controversy involving them allowing that independently published eBook about pedophilia. Contrast that with say Apple's refusal to sell an app featuring the works of a Pulitzer Prize winning cartoonist (which they later reversed after it got widespread media coverage). I bought "The Yoni" from Amazon (print version), which is about the historical use of female genitalia as a sacred symbol. It contains numerous photographs of symbolic representations and outright images of female anatomy. Do you think Apple would allow that book in iTunes?
And regardless, how does that differ from the system we have today? You don't think the publishers are selective in the titles they are willing to publish?
First, you seem to be comparing two different things, never a good thing for a sound argument. The App Store is not the iBookstore, so your comparisons are invalid. Furthermore, Amazon is well known for imposing rapacious terms on everyone, and there's no reason to think customers will be any different once they have no where else to go. When Amazon has you by the balls, it's their practice to squeeze hard.
Fallacy #2: Raising prices isn't Amazon's modus operandi. It never has been. Amazon works on a high volume, low profit system versus Apple's low volume, high profit model.
The Kindle wasn't expensive initially because it had a monopoly on the e-reader market. It was expensive because it was new, the components were expensive, and the fact that Amazon had no way to know whether it would succeed. (Weird, kind of sounds like the initial launch of the iPhone, another product that was "overpriced" originally.)
The people attacking Amazon seem to be stuck on the idea that Amazon wants to kill off all competition. Maybe, but don't other businesses want the same? Would there be many sad faces at Apple if Google announced it was killing Android?
This is a rewrite of history. The Kindle is a cheap piece of plastic crap. Prices were ridiculously high until the iPad was released, at which point they suddenly dropped dramatically. The rest of your argument seems to be that since other companies would like to control entire industries, it's ok that Amazon does, which is farcical, to say the least.
There are other reasons to sell some items below cost. A big one is that it builds good will with customers. If they can get a good price on something, they're more likely to come back and buy from you again. They'll even pay a little extra on some things just knowing how much of a good deal they got on the last item.
When it comes to eBooks, Amazon also had another good reason: building a market. There really wasn't much of a market for eBooks before Amazon created one. (Kind of like the iTunes Store and downloaded music.)
And let's face it, $9.99 was one of those sweet spot prices. It's basically $10, but it lacks that extra decimal so it psychologically feels a lot cheaper. Kind of like $0.99 was a sweet spot for digital tracks.
Music and books are not the same industries, so comparisons aren't valid. I know, you want everything as cheap as possible, but the only way you get that is for someone to get the short end of the stick, which, in this case, will be publishers and authors, and eventually customers.
1. Pricing is kind of limited
2. Books are suppose to be exclusive to Apple.
How to fix it:
1. Open up more pricing options
2. Allow books to be sold anywhere
2. Books are suppose to be exclusive to Apple.
Where did you get this from?
1. Pricing is kind of limited
Apple doesn't set it.
2. Books are suppose to be exclusive to Apple.
No.
Rather than letting the market sort itself out, Apple worked with publishers to make book pricing more expensive by denying Amazon the ability to sell books at the prices it wanted to.
Sounds antitrust practice to me. Anyone was free to see books cheaper than Amazon and gain market share. It's not like the publishers were loosing money! They got their price whatever Amazon sold a book for.
Personally I dislike spin.
The people who lost out from this whole shenanigans was us, the consumer. That is why this is being investigated.
In the short term, yes, consumers would pay more. But in the long term, it would have made Amazon a monopoly and then prices would have steadily climbed anyway. Or, Amazon, being a monopoly would have put pressure on the publishers to lower the wholesale price just as WalMart has forced manufacturers to lower their wholesale prices. Do you know what that led to? Declining quality and the move of manufacturing to China, India, etc.
Low online prices do give us short-term benefits, but in the long term, it also destroys physical retail. Do you really want to walk down Main Street and see nothing but drug stores, dirty delis, liquor stores, check cashing places, fast food restaurants and gas stations? Because that's where the massive move to online purchasing is taking us.
Furthermore, Amazon still has to make a profit. So they lower prices on some items to gain market share, but raise prices on others. WalMart is also a good example of this. They'll sell a DVD player for $25 to get you in the store, but check out lots of other products and they sell at list price. So in the long run, even with Amazon, if you buy a variety of products, you'll pay more.
Apple asked for and got a "most favored nation" clause. All it said was that when the Publisher establishes the price, it can't be one list price in the Apple store and a different list price when they sell to Amazon or any other store. It didn't say that (as far as I know) that Amazon still couldn't sell for a lower price. (If it did, that will definitely be thrown out).
Have you ever done business with a State or the U.S. Government? Guess what they put in almost every contract? A "most favored nation" clause. You can't sell to anyone else for less than you sell to them for the same product/service.
And there's one other issue: when you consistently sell below wholesale price, that can be considered to be "predatory pricing" and it's illegal. And that's what Amazon does in order to gain market share. Apple's not perfect and they probably did do a few things wrong in this case, but the Government went after the wrong party, as far as I'm concerned.
1. You said it perfectly. Publishers colluded. It's not the same as Apple colluded..
Apple was added to this case for boombast! If apple wasn't involved you'd see people saying all over that amazon is the bad player here forcing content providers to support their ebook monopoly or else... It just sounds like this is government overreach.
Thank you for making my point for me. Why should apple be on the hook for what other people do? Secondly, publishers are free to set their own prices. Publishers set the pricing model for retailers not pricing for the end consumer. There is a big difference. I have a feeling this is going to the supreme court and apple and publishers will prevail.
I buy my books directly from the publisher and prices are much cheaper. They give me 40% off and free unreleased books etc.... In amazon's world publishers can't make any money from their ebooks. They should just stop doing business with 3rd party ebook sellers and sell their own books themselves. It makes no sense at all to have a retailer under cutting your efforts to sell your books just so you can lose money on them.
Publishers should just make people go to their website to buy books. If the book is popular people will buy them. Ebooks don't cost zero. Marketing and infrastructure is involved in making eBooks. EBooks are made out of HTML, CSS, JavaScript. You need developers for this stuff. It's not just oh eBooks are cheaper because there is not as much manufacturing costs. The costs are different. Not to mention the third party retailers cut.
The problem is people have been taught that intellectual property has no value because it isn't physical. That's simply not true. You aren't just cutting off manufacturing costs. You are exchanging one cost for another cheaper cost. Publishers and authors deserve to be able to make money off of their investment. Retailers should be able to set the prices of their books. They can't do that when amazon can sell at a loss which undercuts them and their efforts to sell their own books on their own website.
Again if I were the publisher, I'd terminate the contracts with amazon and sell on my website. The publishers need to take control of their content.
Your post makes a few major flaws... Let me quote from the DOJ case against the publishers, and apple. The following is the smoking gun against apple. If this can be proven by the DOJ, then it is clear that apple is guilty of collusion:
As it negotiated with the Publisher Defendants in December 2009 and January
2010,Apple kepteach PublisherDefendant informed of the status ofits negotiations with the
other Publisher Defendants. Apple also assured the Publisher Defendants that its proposals were
the same to each and that no deal Apple agreed to with one publisher would be materially
differentfrom any deal it agreed to with another publisher. Apple thus knowingly served as a
critical conspiracyparticipant by allowing the Publisher Defendants to signal to one another both
(a) whichagency terms would comprise an acceptable means of achieving their ultimategoalof
raisingand stabilizing retail e-book prices,and (b) that they could lock themselves into this
particular means of collectively achieving that goal by all signing their AppleAgency
Agreement.
This states that apple was informing each of the publishers what the other was doing, so that none of the publishers had to "act first". The publishers knew they couldn't raise prices on their own because it would destroy their sales,while competitors books would still sell well. They all had to move in unison, and apple allegedly helped coordinate them.
With a couple of the publishers settling already, all it takes is for them to surface a few emails showing that apple helped facilitate the cross-industry change in pricing. Even if this isn't proven, it's clear that apple knew the publishers were colluding, and setup a system to enable all of the publishers to change their pricing simultaneously. Otherwise, no logical publisher would EVER sign a contract like they did with apple.. It's not worth giving so much control to a minority player in the market.
At the end of the day, it really doesn't matter is all the publisher settle, or if apple does, because a couple of the publishers have settled. As long as they're forced to return to their previous publishing model (turning back the clock on their illegal behavior), the other publishers will be forced to follow suit, or canibalize their sales.
I know this is an apple forum, but it's amazing how many people here think apple can do no harm. This makes sense if you have a large portion of apple stock, but for common people.. why? You're defending a company that actively made things more expensive for you. I personally love my ipad, but refuse to buy from apple's ebook store. There are a lot of apple's stores I won't use because I don't agree with their policies, as they seem to be all about extracting the last cent out of my bank account, and transfer as much of the money as possible to apple. I'll still buy apple's hardware because it's the best out there, but I'm looking forward to cheaper ebooks becoming available on amazon (another company who I give lots of business to, and support... just like google).
Phil
Apple asked for and got a "most favored nation" clause. All it said was that when the Publisher establishes the price, it can't be one list price in the Apple store and a different list price when they sell to Amazon or any other store. It didn't say that (as far as I know) that Amazon still couldn't sell for a lower price. (If it did, that will definitely be thrown out).
so you're basically claiming that apple's contract will be marked Null by your own admission.
Apple's contract said that if any other store attempts to sell an ebook for less than apple does, apple can charge the same price the other store is charging, and then only give the publishers their 70% cut of the new price. This effectively says that the publishers have to set the selling price that other book sellers can charge.
As for your arguments about how lowering prices will kill the industry... It might just... spur innovation in the industry. Considering the VAST majority of the book sale's revenues go to the publisher and not the authors (and the publisher does little more than provide an editor for many books... if that), there is a LOT of room amongst the publishing houses to cut out the fat.
Authors are working for peanuts already, why do you think they'll stop working when their publishers earn less money. Sure, some of the publishers will go out of business if they don't change their ways... Is this a horrible thing? Capitalism relies on businesses failing to get the most efficient usage of resources. Lots of typewriter manufacturers either changed their products, or went out of business when the PC industry took off, why should this be any different? I have no sympathy for these failing companies, it's still the most efficient way to allocate resources. I do feel bad for many of their workers, but most of them manage to get back on their feet before too long, and everyone benefits from a more efficient allocation of workers.
Phil
Your post makes a few major flaws... Let me quote from the DOJ case against the publishers, and apple. The following is the smoking gun against apple. If this can be proven by the DOJ, then it is clear that apple is guilty of collusion...
Prosecutors make a lot of grandiose claims in their filings, and it always sounds like they have a smoking gun, but it often turns out to be nothing more than hot air.
Rather than letting the market sort itself out, Apple worked with publishers to make book pricing more expensive by denying Amazon the ability to sell books at the prices it wanted to.
Sounds antitrust practice to me. Anyone was free to see books cheaper than Amazon and gain market share. It's not like the publishers were loosing money! They got their price whatever Amazon sold a book for.
Personally I dislike spin.
The people who lost out from this whole shenanigans was us, the consumer. That is why this is being investigated.
--------
The DoJ is colluding with Amazon to resurrect its monopolistic enterprise. The AG is putting the cart before the horse. He is siding with a monopolist which has more than 90% of the market, achieved through price gouging and product dumping. Just because Amazon is charging below cost price does not mean it is good for the consumers in the long run. Books are a cultural thing and once you destroy this intellectual aspect of the industry, the long-term result would be disastrous, leading to mediocre standards. Nobody is going to do serious research to write a good book if he is going to be paid a pittance. Just as the US has lost many industries to others through short-sightedness of politicians and bureaucrats, the book industry will also migrate to such places as India and China. Workers will be thrown out of job and thousands of stores will be shuttered for good. Think tanks will say that the workers can go and do other jobs because the US is resilient. But the politicians have screwed up so many areas of human endeavors in the US that the rate of resiliency itself has become a victim of neglect. So why has the US, which was the premier country in so many areas of disciplines two decades ago, declined so precipitously? This has to do with the poor quality of narcissistic politicians and bureaucrats running the country now.
Are we going to see the same scenario of the devastating result of the collusion of politicians with the banking industry being repeated again? At that time the politicians and their think-tanks claim that cheap loans and credit will help consumers realize the American dream. In the short-term it seemed that this tactic was working, and consumers were led down the garden path, but soon the banks were gouging customers with high interest rate for their cheap loans. In the long run the whole economy tanked, thanks to the unconscionable conduct of the greedy bankers and stupidity of ivory-tower intellectuals.
Amazon is becoming such a creature in the making. Nobody with a thinking brain would believe that Amazon could sustain itself on perpetual losses. A time would come when it will have to recover for all such losses. And Amazon being a monopolist, you know the answer to the final outcome.
Books are a cultural thing and once you destroy this intellectual aspect of the industry, the long-term result would be disastrous, leading to mediocre standards. Nobody is going to do serious research to write a good book if he is going to be paid a pittance.
You need not continue on after saying this, because if this were true, there'd hardly be any new books written today. Aside from a handful of best-seller authors, most barely receive a pittance. The publisher rake in money, and the authors might get a few thousand dollars. For many authors, writing is NOT their day job, as it cannot pay the bills.
What's the biggest racket of them all though is the textbook market. Professors and graduate students basically write these books for free... Well, not really for free, but the university (or government grants etc) pays them, and they spend some of their time working on these books. Then the publisher releases the book, and, if the authors lucky they MAY get royalties from it (I have a friend who wrote an entire chapter for a text book,and his "reward" was that he could buy a copy of the book for a discounted price... He didn't even get a copy of the book he helped to write!). One of my professors wrote a book that is used in enough courses across the country, and his income from the book might be a few thousand a year... I'm pretty sure it's less that that. Considering he spent months of his life writing this, he obviously didn't write it for the money. Of course, these publishers that you're protecting are charging hundreds of dollars for these books, and seeing to it that the authors change the questions in them every couple years so that they can sell a new edition and kill the used textbook markets.
So yeah, if the publishers profits are harmed by the free market, so be it, they've been milking the consumers for years, and it's about time a disruptive technology came along that challenged them. Stop pretending this is remotely about the author, I bet they were paid the same pittance regardless of whether the ebook was sold using the agency model or the wholesale model. The only thing apple has done for this industry is helped to maintain the publishers profits,while guaranteeing that they make the maximum possible profit off every book sold. It's reaching the point where apple is being as greedy as the publishers, making sure they get their share of the loot from the authors work (and 30% is a fairly nice piece of the pie for transferring a couple MB across the internet and processing a credit card order).
Phil
A simple before and after comparison of the before and after average prices should suffice as evidence that what you say is true.
Feel free to present it.
Will those sixteen states take into account the lower prices that resulted from Amazon avoiding paying them sales tax?
That's not entirely enough. If those lower Amazon e-book prices were shown to be below actual cost prices the fact the prices went up would not be due to collusion, but simply attributable to Amazon no longer willing to take the loss. Just because prices rose doesn't mean there was any illegal activity by anyone at all.
That argument seems to be a huge hole in the DoJs case if it ever makes it as far as a trial, since the Amazon actual cost has been reported to be in the $12.00 range. That would make $12.99 to $14.99 prices reasonable fair market value both on Amazon and iBookstore. That would mean bye-bye to beyond a reasonable doubt when the pricing changes are looked at. Remove that as a case motivator and there's nothing else left worth pursuing as the smoking gun got identified as a water pistol, not a smoking gun after all.
his states that apple was informing each of the publishers what the other was doing, so that none of the publishers had to "act first". The publishers knew they couldn't raise prices on their own because it would destroy their sales,while competitors books would still sell well. They all had to move in unison, and apple allegedly helped coordinate them.
With a couple of the publishers settling already, all it takes is for them to surface a few emails showing that apple helped facilitate the cross-industry change in pricing. Even if this isn't proven, it's clear that apple knew the publishers were colluding, and setup a system to enable all of the publishers to change their pricing simultaneously. Otherwise, no logical publisher would EVER sign a contract like they did with apple.. It's not worth giving so much control to a minority player in the market.
That's an interesting take with flaws of its own. How come the iTunes store music and video agency model has been tacitly allowed as legal when all the negotiations and assurances of equal treatment were made there too? That model has been very transparent for 10 years now, why should extending it to another market suddenly make an openly consistent agency model a collusory practice?
See, it's not as simple as you would like it to be. There are an tremendous number of unintended consequences awaiting the conclusion of this case because the exact thing that is being called the collusion in your analysis of the states writeup is the consistent application of the agency pricing model.
If the collusion stands does that make Apple's other agency model negotiations illegal by extension? That would not be far fetched.
If Apple's other iTMS negotiations are then called collusion by logical extension, who in government do we blame for being asleep at the switch and allowing this illegal collusory profiteering to last for over 10 years?
The iOS app store is probably safe as it is part of a singular vertical market where there is no notion of internal price competition to consider.
That's an interesting take with flaws of its own. ...
The other flaw in his argument is that books are not interchangeable commodities. Except for public domain "classics", each book is unique, so it's not like you can just buy another publishers version of most books. So the argument that other publishers might undercut your price is significantly muted.
That's a pretty big accusation your presenting as fact without a single shred of evidence to back it up.
Maybe the DoJ should also investigate the same agency model Apple used for their App Store because those App Store apps are so expensive¡
Precisely. Apple only have to point to the benefits to both app developers and consumers of the agency model as implemented in the App Store to make the case against eBook sales look as ridiculous as it is. There is no need for wholesalers and retailers in an electronic marketplace, just someone to set up an electronic store in which transactions between developers/authors and their customers are facilitated. And it was Apple, and Steve Jobs, who was smart enough to do just that. And now Apple have developed iBooks Author which allows authors to get their eBooks out to their customers without the need for traditional book publishers. This is now a fantastic opportunity for both eBook authors and readers - the ones that really matter.
The DoJ should stop wasting its money on a case they must not win.
Nonsense. Even if we assume, for the sake of argument, that all parties charged are "guilty" of the accusations, it's the job of the DoJ to do what's best for the country. Setting up Amazon as the controller of the publishing industry is contrary to the public interest, and ultimately harmful to this country's citizens.
its nonsense that the case at hand is publishers + apple?
That is the case. Not amazon.
If the DoJ is working on hypothetical "what ifs: then they can join apple and amazon together with the "what if we colluded together argument.
the case at hand is the disccusion
its nonsense that the case at hand is publishers + apple?
That is the case. Not amazon.
If the DoJ is working on hypothetical "what ifs: then they can join apple and amazon together with the "what if we colluded together argument.
the case at hand is the disccusion
It's nonsense to assert that the DoJ ought not to consider the public interest in enforcing antitrust law since the whole point of antitrust law is to protect the public interest. Justice may be blind, but it's not supposed to be stupid.
It's nonsense to assert that the DoJ ought not to consider the public interest in enforcing antitrust law since the whole point of antitrust law is to protect the public interest. Justice may be blind, but it's not supposed to be stupid.
Oh dear. This case is just that, this case. The wider issues should be considered. However, the legal actions of those within this case is what is currently pursued. The hypothetical endpoint of the wider industry is not.
Unless you believe that DoJ should ignore what they see as illegal actions, but to rather focus on forecast potential actions of a corporate.